FILE - In this Feb. 15, 2015 file photo, the Space Needle towers in the background beyond a container ship anchored in Elliott Bay near downtown Seattle. The Commerce Department releases international trade data for January on Friday, March 6, 2015. (AP Photo/Elaine Thompson, File)

WASHINGTON — The U.S. trade deficit in January dropped sharply as both exports and imports fell.

The Commerce Department said Friday that the deficit fell 8.3 percent to $41.8 billion in January from $45.6 billion in December. The shrinking trade gap reflected a drop in exports, which fell $5.6 billion to $189.4 billion. Imports fell $9.4 billion to $231.1 billion.

Much of the dip in imports likely came from lower oil prices and a labor dispute that disrupted shipping at West Coast ports. At the same time, the strong dollar that has made American-made goods less affordable abroad is weighing down exports.

The trade deficit reached $505 billion last year, up 6 percent from the 2013 deficit of $476.4 billion. It was the largest imbalance since 2012. Economists expect the deficit to widen further in 2015 as stable growth in the United States drives imports and tepid growth overseas paired with a strong dollar depress exports.

The politically sensitive deficit with China was $29.3 billion in January, down from $30.4 billion in December. Still, that constant imbalance has created pressure on Congress and the Obama administration to take tougher actions against what critics see as China's unfair trade practices. U.S. manufacturers say that China is manipulating its currency to keep it artificially low against the dollar, which benefits Chinese exporters while creating a barrier for U.S goods.

Yet a domestic energy boom has kept the deficit in check.

Not only have oil costs plunged since June, but the U.S. production made possible by fracking has reduced dependence on foreign oil. Between December and January, petroleum imports fell 23 percent to $17.7 billion.